Język Polski
English
Published
:
2013-06-30
Recognition and Measurement of Fixed Assets in the Books of Accounts in an Unstable Economy
Gracjan Chrobak
Abstract
Financial reports, being the final product of an accounting system, ought to provide reliable, objective and comparable information on a company's financial condition, operating performance and cash flows. In an unstable economy, financial reporting encounters major difficulties in trying to obtain high quality information, and thus comply with the ideal of giving a true picture of a company's performance. A pivotal point in the pursuit of this ideal seems to be associated with the "value creation approach" to describing economic facts. It is founded on a complete and adequate pricing of a company's assets and liabilities on the balance sheet date, focused on producing an objective measure of its net assets. There are some challenges in implementing the concept of a true and fair view from the use of asset pricing models, based on the cost incurred in purchasing or producing an item. The central proposition put forth in this paper is that models based on revaluation appear to be more appropriate in a market environment characterized by substantial price fluctuations. These should be able to ensure that all trends, whether negative or positive, in the prices of fixed assets (notably tangible and financial ones) are duly reflected in financial reports. The concept of revaluation reserve merits a mention in this context. This paper seeks to discuss the principles governing the accounting of fixed assets where there valuation model is applied to previously entered items. Furthermore, the paper presents the treatment of reserve capital from revaluation (revaluation reserve) under Polish and international legislation on financial reporting.(original abstract)Keywords:
Fixed assets, Financial assets, Intangible asset, Balance law, Valuation of financial assetsMost read articles by the same author(s)
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Chrobak, G. (2013). Recognition and Measurement of Fixed Assets in the Books of Accounts in an Unstable Economy. Zeszyty Naukowe Wyższej Szkoły Bankowej W Poznaniu, 48(3). Retrieved from https://journals.wsb.poznan.pl/index.php/znwsb/article/view/1864